Testimony before the Senate Committee on

Under Secretary for Domestic Finance Robert K. Steel Testimony before the Senate Committee on Banking, Housing and Urban Affairs.

January 31, 2008HP-792
Under Secretary for Domestic Finance Robert K. Steel Testimony before the Senate Committee on Banking, Housing and Urban Affairs
Washington - Chairman Dodd, Ranking Member Shelby, Members of the Committee, good morning, I very much appreciate the opportunity to appear before you today to present the Treasury Department's perspective on "Foreclosure Prevention and Neighborhood Preservation." These are important and challenging issues; addressing them will require collaborative work on all our parts, and I look forward to hearing your perspectives and working together.
Let me begin by broadly examining the characteristics of foreclosure, in both good times and bad, then describe how our approach to this issue has developed, and finally provide an update on the progress we are making to address current challenges.
Characteristics of Foreclosure
We are experiencing a period of adjustment in the housing sector of our economy. Fortunately, our economy is resilient and diverse, and our long-term economic fundamentals remain strong. Nevertheless, the Administration recognizes the importance of housing to our economy, and as Secretary Paulson has said many times, the housing decline is the most significant current risk to our economy.
In addition to the housing decline exacting a penalty on economic growth, many individual families will experience firsthand strain due to resetting mortgage rates and home price depreciation. Too many American homeowners face the frightening prospect of losing their home in foreclosure – and a significant number of other families already have. Foreclosures also pose negative externalities, placing hardships on neighboring homes and undermining the financial stability of broader communities and the families who live there. Many homeowners who are paying their mortgages on time face lower property values due to foreclosures in their neighborhood.
The latest available data (from the third quarter of last year) indicate that 2007 was on track for a foreclosure starts rate of 2.7 percent. To put that number into perspective we should recognize that many homes end up in foreclosure every year, even when housing markets are strong. Between 2001 and 2005, for example, the U.S. annual rate of foreclosure starts averaged approximately 1.7 percent, meaning more than 650,000 homeowners began the foreclosure process each year. This baseline rate of foreclosure can result from events such as job loss, credit problems, changes in family circumstances, or other sources of economic instability.
Over the course of the next two years, we expect the foreclosure rate to remain elevated above its historic level. A rising foreclosure rate during a period of housing price depreciation is not surprising. Yet, largely because of relaxed underwriting standards in recent years – particularly in the subprime market – and resetting mortgages, the number of homeowners facing hardship will be higher than during other recent housing downturns.
In total, approximately 1.8 million subprime mortgages are expected to reset over the next two years, but not all will end in foreclosure. Many homeowners will be able to afford their new payments without trouble or may be able to qualify for refinanced, fixed-rate mortgages on their own. In fact, of the 2/28 subprime ARMs originated in 2005, 88 percent had not defaulted as of late last year. Others, however, have stretched far beyond their means, and unfortunately, foreclosure may be unavoidable. In fact, many loans enter into foreclosure before ever reaching the reset date. A third group of homeowners facing resets falls somewhere in the middle. The challenge is to identify the homeowners in this middle group, who with a focused and timely response can stay in their homes.
Treasury's Response
The Administration's goal is to prevent foreclosures for homeowners. It is not about assisting lenders or bailing out investors.
Our response is based upon a three point plan: (1) to better identify, reach and connect with counselors those at-risk homeowners who can be helped, (2) to assist in developing additional products for homeowners, and (3) to increase the speed and efficiency of moving these at-risk borrowers into affordable solutions.
Whenever facing a challenging public policy issue, such as this one, the first step is full understanding. While we are continuing to learn, our response to date represents months of listening Congress to leading academics, servicers, mortgage counselors, lenders, homeowners, and investors to understand the causes of foreclosures and the best ways to help people keep their homes.
Last March, in a meeting hosted by Chairman Bair at the Federal Deposit Insurance Corporation (FDIC), we heard from several housing experts to help us understand the scope and scale of these challenges. In April and May, the Treasury Department hosted two large meetings, inviting all the relevant regulators to help us gain a greater understanding of the problem and map out potential policy responses. Over the course of the summer months, we sought the sound counsel of outside experts. We spoke with dozens of individuals, including leading counselors, mortgage servicers, academics, housing and consumer advocates, and other experts, such as the late Ned Gramlich, a former Federal Reserve Governor and prescient housing scholar who predicted the significance of these challenges before anyone else.
On August 31, President Bush announced an aggressive, comprehensive plan to help at-risk homeowners stay in their primary residences. The President charged Secretary Jackson and Secretary Paulson to lead this effort.
As the Treasury Department and the Department of Housing and Urban Development (HUD) met with a variety of mortgage market participants and non-profit credit counselors in the late summer and early fall of 2007, it became clear that while many market participants were working diligently on their own trying to reach and help homeowners, but it was inadequate given the scale and pace of pending resets.
On October 10, HOPE NOW was formed as an alliance among counselors, servicers, investors, and other mortgage market participants to maximize outreach efforts to at-risk homeowners and help them stay in their homes. The Alliance grew and today servicers participating in HOPE NOW comprise over 94 percent of the subprime mortgage loan market.
HOPE NOW adopted a centralized hotline for telephonic foreclosure prevention counseling (888-995-HOPE, operated by the Homeownership Preservation Foundation). Expanding and sustaining the capacity of the HOPE hotline was essential as outreach efforts increased. Servicers and investors now reimburse HOPE hotline counselors $100 for every counseling session completed. This is an important step toward maintaining a sustainable funding model for counseling, as government and foundation funding have traditionally been the sole source of counselor support.
Additionally, HOPE NOW servicers are contacting all adjustable-rate mortgage borrowers at a minimum of 120 days prior to their mortgage reset. This will allow servicers' early identification of borrowers who will have challenges – greatly increasing their options for help. While some servicers were already doing this, we believe it was an important step to standardize this practice for all HOPE NOW servicers.
Furthermore, through coordinated outreach efforts, HOPE NOW members are reaching out to all at-risk borrowers and offering help through both mortgage servicers and non-profit credit counselors. A direct mail campaign began in November to contact all borrowers who are 60 days or more delinquent on their loans with no prior servicer contact. This letter informs them that help is available.
Secretary Paulson has also encouraged HOPE NOW members to expand and expedite mortgage solutions for at-risk borrowers. On December 6, President Bush announced a new private-sector framework to streamline the process for modifying and refinancing subprime mortgages for eligible homeowners. These new industry guidelines, issued by the American Securitization Forum (ASF), created an efficient process for identifying borrowers who qualify for refinancing or loan modifications. This, in turn, will free up resources and allow mortgage servicers to focus on those borrowers who require more in-depth analysis.
Lastly, HOPE NOW servicers and counselors have finalized best practices that will increase efficiency in communication among servicers, counselors and homeowners. Through these best practices, including the continued development of cross-industry technology, more homeowners will be helped as counselors are more effectively able to connect with servicers.
Early Progress
As Secretary Paulson has said, we are committed to measuring the success of this program as it is implemented. Before the establishment of HOPE NOW the industry did not have a thorough, standardized set of metrics with which to evaluate servicers' loss-mitigation performance or to evaluate counselors' effectiveness. Today, the Alliance is standardizing a variety of measures which policymakers, homeowners and investors need in order to monitor performance. These performance measurements include data such as the number of loans in default, outcomes for these loans, and success rates for modifications and refinances. These metrics will allow us to identify categories of borrowers who can be helped, determine successful treatments, and measure the rate of successful outcomes.
Early sets of numbers have already been reported, and these demonstrate that material progress is being made.
For instance, early data indicate that Alliance members are identifying and connecting with more at-risk borrowers than just a few months ago.
Since its launch, HOPE NOW has worked to increase significantly the awareness and capacity of the HOPE hotline – in August the hotline was receiving an average of 625 phone calls a day; the HOPE hotline is now receiving 4,000 new phone calls a day. That is a 540 percent increase.
Moreover, in the first two months of a new monthly mailing campaign, HOPE NOW and its members have mailed 483,000 letters to delinquent homeowners who had previously avoided contact, with a response rate to date of over 16 percent. That is an estimated 77,000 borrowers who called for help after receiving a letter.
In addition to outreach, new affordable mortgage solutions are being developed to help homeowners.
On August 31, the Administration announced FHASecure to offer homeowners foreclosure alternatives; since then, over 75,000 Federal Housing Administration (FHA) insured loans have been closed putting over $10 billion to work. In addition, it is estimated that about 100,000 more applications are in the pipeline.
Just last month, Congress passed a temporary mortgage debt tax relief act that will provide homeowners relief from taxes that would have otherwise been due from principal forgiveness. This tax relief will help homeowners avoid nearly $200 million in taxes a year for the next three years.
The Administration has advocated temporarily raising the cap on tax-exempt bonds for state housing authorities to help borrowers refinance. This proposal would increase the total annual cap on existing programs by $15 billion over three years, with this extra cap targeted at refinancing existing loans of subprime borrowers. This is important because real estate markets are regional and states are well-positioned to tailor programs that meet the specific needs of their communities.
We also have made a great deal of progress in increasing the speed and efficiency of moving borrowers into affordable solutions. The ASF program announced last month is helping fast-track eligible borrowers into a refinancing or loan modification, and it is freeing up resources, allowing servicers and counselors to focus on borrowers who need detailed case-by-case help. The ASF streamlined plan is only one part of our effort, but we expect the results to show a meaningful increase in the number of modifications and refinances as reporting begins.
The Mortgage Bankers Association and HOPE NOW have both made good progress in helping us evaluate performance to date. Although a more in-depth analysis of recent activity, including the beginning progress of the fast-track plan, will be available in the coming weeks and months, HOPE NOW reported that:
The industry helped 370,000 homeowners with subprime loans in the second half of 2007 through modifications or new repayment plans, and 120,000 of those homeowners received modifications.
Moreover, the rate of modifications of subprime loans tripled from the third quarter to the fourth quarter of calendar year 2007, and even more are expected as we move forward in 2008 and the ASF framework begins to take effect.
The Administration also has requested that the Congress do its part and we are appreciative that significant progress has been made. As you know, the Congress appropriated an additional $180 million to NeighborWorks to fund counselor networks. We also applaud the swift action taken by Congress to pass the President's tax relief proposal, which was signed into law in December.
FHA modernization is moving through the Congress, and we are hopeful that it will reach the President's desk soon. Additionally, government sponsored enterprise (GSE) reform has cleared the House of Representatives, and we look forward to working with this Committee as Members consider legislation on the subject. The Treasury Department also looks forward to working with the Congress on the Administration's proposal to allow state housing authorities to issue tax-exempt bonds to help refinance borrowers into affordable mortgage products.
Conclusion
Mr. Chairman, in conclusion, let me thank you for holding this hearing. Under the President's leadership, the Administration is working diligently to help mitigate the impact of rising foreclosures on homeowners and the economy. We have made substantial progress since August and there is much more work to do. We will continue to learn as we move forward and look for additional measures to help avoid preventable foreclosures.
Thank you and I look forward to your questions.

Secretary Paulson’s Remarks on the Housing Markets

January 30, 2008

While a swift, simple and substantive fiscal growth package will provide a boost and add to job creation this year, it is not intended or expected to slow down the housing correction. After years of unsustainable home price appreciation, this is a necessary correction. On Monday, the Commerce Department reported that over the 12 months of 2007, new homes sales dropped 41 percent and new home prices declined by 10.4 percent. Other measures also show roughly flat or falling home prices over the last year. The Administration's focus has been --- and in addition to this fiscal growth plan will continue to be --- aggressive action to try to minimize the impact of the housing downturn on homeowners and the real economy by preventing avoidable foreclosures.
Last fall, we encouraged the creation of the HOPE NOW alliance, a coalition representing over 90 percent of the subprime servicing market and non-profit mortgage counseling organizations, trade associations and investors. This industry-wide effort employs multiple tools to reach and help struggling homeowners, including streamlining subprime borrowers into refinancings and loan modifications to avoid a market failure. And they are doing so without asking American taxpayers to pay the bill.
There are promising developments. According to HOPE NOW, the industry assisted 370,000 homeowners in the second half of 2007, and mortgage servicers modified subprime loans during the fourth quarter at a rate three times faster than in the third quarter. In its first two months, HOPE NOW sent over 480,000 letters to at-risk borrowers who had not reached out for help previously. Servicers estimate that, as a result of the first wave of letters approximately 16 percent, or 77,000 homeowners, have called their servicer or a non-profit counselor to see if foreclosure can be avoided.
We will receive regular progress reports in the coming months. As we learn more, we will look for additional measures to reach more borrowers and prevent as many avoidable foreclosures as possible.
The Administration has also, through FHASecure, expanded affordable mortgage options. Working with Congress, we have increased funding for mortgage counselors who assist struggling homeowners. We have also temporarily eliminated taxes on forgiven mortgage debt. But more action is needed in the housing sector, action that is as important as a short-term fiscal growth plan.
We have urged Congress to move quickly to finalize its work on the FHA modernization bill --- that will provide financing for about 250,000 borrowers. Congress should also allow states to issue tax-exempt bonds to raise funds for innovative refinancing programs.
And it is vitally important that Congress pass GSE reform legislation to enhance regulatory oversight for Fannie Mae and Freddie Mac. The House leaders decided to include a temporary increase in the GSEs' conforming loan limits in the economic growth bill. This could be helpful to jumbo mortgage borrowers; however, higher limits are inconsistent with the GSEs' affordable housing mission. Under the House bill, these higher limits expire at the end of this year, and this should not be an excuse for postponing much-needed reform. The House has already passed GSE reform legislation and Senate Banking Chairman Dodd has assured me that he will take legislation up soon. We will continue to press Congress for this reform and stronger GSE regulatory oversight.

The F.B.I

CNN is reporting the F.B.I is getting involved.....Here is what CNN is reporting:
(I was wondering a loud to a friend regarding the recent stock price increases on some home builders..interesting)

WASHINGTON (CNN) -- Complaints about potential mortgage fraud are up during the subprime mortgage crisis, and the FBI has opened criminal investigations of 14 companies related to subprime mortgage loans, the agency said Tuesday.

The FBI is examining 14 companies for possible fraud in the wake of the subprime mortgage crisis.

The FBI did not identify the companies.
Neil Power, chief of the FBI economic crimes unit, attributed the increase "to good old-fashioned greed."
"On insider trading, we're looking in some cases at whether executives were aware that the value of their holdings would be going down and the executives traded on that information," said Power.
"On accounting fraud, we're looking at housing developers who may have reported cash reserve accounts to reflect falsely inflated values," he told CNN.
Power and other senior officials said the number of suspicious activity reports they review for potential investigation skyrocketed from 3,000 in fiscal year 2003 to about 35,000 in 2006, to 48,000 in 2007. And in the first quarter of fiscal year 2008, Power said, officials have already received 15,000 such reports, putting them on pace to receive 60,000 complaints this year.
The FBI said it investigates only cases involving losses of $500,000 or more, and last year 56 percent of all cases had losses of more than $1 million. The number of pending cases swelled from 800 in fiscal year 2006 to 1,200 in 2007.
Kenneth Kaiser, FBI assistant director for the Criminal Investigative Division, said the FBI has developed an initiative focused on subprime mortgage loan fraud and is working with investigators from other federal agencies.
Officials identified the states that are the "top 10 mortgage fraud hot spots" as California, New York, Texas, Florida, Georgia, Utah, Illinois, Indiana, Ohio and Michigan.

Treasury Assistant Secretary for Economic Policy

The housing market is likely to remain weak well into 2008. Inventories of unsold homes, both new and existing, remain substantially above levels that were typical before or during the housing sector boom. The inventory of unsold new homes rose to 9.6 months of supply in December; inventories averaged just above a 4 month supply from 2000 to 2005. The inventory overhang will weigh on both housing prices and construction. Nationwide, home prices are roughly flat over the past year, with some regions that experienced the highest house price appreciation during the boom now seeing outright price declines. Residential investment has subtracted nearly a full percentage point from annualized GDP growth during each of the previous four quarters and looks to remain a drag on the economy into 2008. Housing starts totaled 1.006 million at an annual rate in December, down more than 38 percent from a year earlier, and are at their lowest level since May 1991. Permits for the single-family sector remain below starts, indicating continued future weakness in residential investment. Homebuilder optimism, which is closely correlated with homebuilding activity, is still near a record-low level.
The housing market slump and broader economic weakness has contributed to an increase in mortgage delinquencies and foreclosures. New foreclosures jumped to 0.8 percent of all loans serviced in 2007Q3, according to a survey by the Mortgage Bankers Association, totaling slightly more than 350,000 loans in the Q3 survey alone. Subprime adjustable rate mortgages (ARMs) are largely responsible for this trend, but an increase in prime ARM foreclosure starts suggests that credit difficulties are broader than just subprime. Overall, about 1.3 percent of all mortgages serviced in the Mortgage Bankers survey were more than 90 days delinquent in 2007Q3, amounting to nearly 575,000 loans. Foreclosures are expected to rise further as an estimated 1.8 million U.S. owner-occupied subprime mortgages face interest rate resets in 2008 and 2009.
The Administration has taken steps to help prevent avoidable foreclosures and minimize the impact of the housing downturn on markets and the economy. Through FHASecure, the Administration has expanded affordable mortgage options; last fall, the Administration encouraged the creation of the HOPE NOW alliance to reach and help struggling homeowners. These efforts have resulted in progress. According to HOPE NOW, the industry assisted 370,000 homeowners in the second half of 2007, and mortgage servicers modified subprime loans during the fourth quarter at a rate three times faster than in the third quarter.
Working with Congress, the Administration has also temporarily eliminated taxes on forgiven mortgage debt so homeowners facing difficult mortgage situations do not also face adverse tax consequences. The Administration has urged Congress to pass legislation to modernize the Federal Housing Administration, allow states to issue tax-exempt bonds to fund refinancing programs, and undertake comprehensive reform of the housing government sponsored enterprises.
On Thursday, January 24, the President and the bipartisan leadership of the House of Representatives reached agreement on a package of personal and business tax relief to support economic growth while credit and housing markets continue to adjust. Together, the proposal will inject about $150 billion into the economy in 2008, creating over half a million additional jobs by the end of this year. In sum, growth is expected to continue, albeit at a modest pace and with increased downside risks. Rapid enactment of the bipartisan fiscal package would support growth and help to ensure continued economic expansion and job creation in 2008.

You May Want To Consider Refinance 5.5% is a good number

I've been calling on some of our past clients to let them know that cuurently the rate are as low as 5.5% plus through economy stilumius motivation - many are no cost refinances. Rueters reports a major up tick in refincnaces since the very recent attempt to jump start a lagging economy.
Risky subprime borrowers may benefit, but probably less so since lenders burned by mortgage losses have tightened their purse strings in recent months and have instated tight lending rules.
Quicken Loans saw a 50 percent pickup in loan applications after the Fed rate cut, Walters said. At LendingTree.com, daily refinance inquiries soared 230 percent to their highest ever, a spokeswoman said.
Refinancings "are one of the few areas where the rate cut has an immediate effect on the economy," said Nicholas Bratsafolis, chief executive officer of Refinance.com, an online lender that saw its applications double this week.
Applications for refinancings before the rate cut had already risen by 92 percent since early November, the Mortgage Bankers Association said on Wednesday. The increase was due to lower rates and the multiple applications made by borrowers expecting to be turned down by one or more lenders.
A loan is conforming if it's eligible for purchase by government-sponsored enterprises Fannie Mae and Freddie Mac, which still garner investor support because they guarantee principal and interest payments on mortgage-backed securities they issue. Among requirements, loans must be $417,000 or less and carry mortgage insurance if the borrower has less than 20 percent equity in the home.
Creditworthy borrowers with adjustable-rate mortgages may be the biggest winners, with the fresh opportunity to escape the $165 billion in prime loans whose payments are slated to rise this year. Those borrowers have been among the most active on LendingTree.com, said C.D. Davies, chief executive officer of the online lender.
For all the hoopla, refinancings will fall short of the record wave of 2003 when 30-year rates hovered around current levels, or as low as 4.99 percent, analysts said.
The mortgage market, totaling more than $10 trillion, is still loaded with loans that will not qualify for refinancing or whose rates do not justify getting a new loan.
Jumbo rates remain stubbornly high at about 0.8 percentage point above conforming loan rates -- compared with about 0.15 point during boom years -- since jittery investors have cut off an important source of funding for lenders.

Fannie Mae (FNM.N: Quote, Profile, Research) and Freddie Mac (FRE.N: Quote, Profile, Research) themselves have raised costs passed on to borrowers as they reassess their risk-taking. Falling home prices across the nation have eroded home equity, reducing the temptation to apply for "cash-out" refinancings.
Many subprime borrowers with adjustable rate loans will not qualify for any loan unless they have improved their credit. One hope for those homeowners are loans backed by the Federal Housing Administration (FHA) that require just 3 percent equity, Bratsafolis said.
Perversely, the impetus for lower rates may even result in a worsening of the housing crisis, analysts said. A recession would cause businesses to tighten up on credit for those who need it most, including subprime borrowers with $370 billion in mortgages slated for rate resets this year, the analysts said.
"This time around it's more skewed to people with decent credit and some down payment and equity in homes," said Quicken's Walters. "People with poor credit will probably not be able to take advantage."

Economic Growth Package and how it beneifts Americans

U.S. Department of the Treasury FACT SHEET:
Married with children:

1) Married couple with two children1, earned income of $4,000, no federal income tax paid.
• Individual rebate = $600
• Child tax credit = $600
TOTAL = $1,200



2) Married couple with two children, earned income in excess of $3,000, AGI = $45,000, federal income tax is $323.
• Individual rebate = $600
• Child tax credit = $600
TOTAL = $1,200



3) Married couple with two children, AGI = $48,000, federal income tax is $773.
• Individual rebate = $773
• Child tax credit = $600
TOTAL = $1,373



4) Married couple with two children, AGI = $80,000, federal income tax paid in excess of $1,200.
• Individual rebate = $1,200
• Child tax credit = $600
TOTAL = $1,800



5) Married couple with two children, AGI = $160,000, federal income tax paid in excess of $1,200.
• Individual rebate = $1,200
• Child tax credit = $600
• Phaseout reduction = ($500) [5% x ($160,000 - $150,000) = $500]
TOTAL = $1,300

1 All children referenced in the examples are qualifying children for purposes of the child tax credit.

Head of household with children:

1) Single parent with two children, earned income of $4,000, no federal income tax paid.
• Individual rebate = $300
• Child tax credit = $600
TOTAL = $900



2) Single parent with two children, earned income in excess of $3,000, AGI = $38,000, federal income tax is $433.
• Individual rebate = $433
• Child tax credit = $600
TOTAL =$1,050



3) Single parent with two children, AGI = $60,000, federal income tax paid in excess of $600.
• Individual rebate = $600
• Child credit = $600
TOTAL =$1,200



4) Single parent with two children, AGI = $90,000, federal income tax paid in excess of $600.
• Individual rebate = $600
• Child credit = $600
• Phaseout reduction = ($750) [5% x ($90,000 - $75,000)]
TOTAL = $450


Married, no children:

1) Married couple with no children, earned income of $4,000, no federal income tax paid.
• Individual rebate = $600


2) Married couple with no children, earned income in excess of $3,000, AGI = $20,000, federal income tax is $930.
• Individual rebate = $930


3) Married couple with no children, AGI = $25,000, federal income tax is $1,430.
• Individual rebate = $1,200


4) Married couple with no children, AGI = $160,000, federal income tax paid in excess of $1,200.
• Individual rebate = $1,200
• Phaseout reduction = ($500) [5% x ($160,000 - $150,000)]
TOTAL = $700





Single, no children:

1) Individual with earned income of $4,000, no federal income tax paid.
• Individual rebate = $300



2) Individual with earned income in excess of $3,000, AGI = $10,000, federal income tax is $125.
• Individual rebate = $300



3) Individual with AGI = $16,000, federal income tax is $725.
• Individual rebate = $600



4) Individual with AGI = $80,000, federal income tax paid in excess of $600.
• Individual rebate = $600
• Phaseout reduction = ($250) [5% x ($80,000 - $75,000)]
TOTAL = $350

As you are well aware, 2008 is forecasted to be a challenging year for the mortgage industry, characterized by a declining Housing Price Index in a wide variety of metropolitan markets. In the context of the prominent threat to our industry of collateral values falling below outstanding loan balances, mortgage professionals must strive to ensure that borrowers do not take on loans that they do not have the ability or economic interest to repay. Because of these market conditions, as well as policies implemented by Government Sponsored Enterprises and Mortgage Insurance agencies, Countrywide®, America's Wholesale Lender® is adopting new Soft Market policies designed to help serve qualified borrowers in markets which are either declining or projected to decline in 2008. Impacted markets across the nation have been categorized, with Category 5 being the highest risk for declining market value and Category 1 markets currently demonstrating more stable market values. Those counties in a higher risk category are subject to additional guideline restrictions as described below. Click here to view a list of the counties currently attributed* to Soft Market categories 1-5. The following Soft Market policy became effective January 18, 2008: Conforming, Non-Conforming, Expanded Approval (EA), and Conventional Bond loans:
Soft Market Category 4-5 loans
Maximum financing will be reduced by 5%Example: Maximum financing per Countrywide's Loan Program Guide allows for 95% LTV. Loans in Category 4-5 will be limited to a new max LTV of 90%.
Soft Market Category 1-3 loans
Maximum financing will be reduced by 5%, only if the appraisal or appraisal review indicates any of the following:
Declining Market
Oversupply
Marketing time over 6 months For the above categories, if the loan is already 5% below the maximum allowable financing, no further reduction is required. Home Equity**
Soft Market Category 5 loans
Maximum financing will be reduced by 10%, unless the loan is already 10% below the maximum allowable financing
Soft Market Category 4 loans
Maximum financing will be reduced by 5%, unless the loan is already 5% below the maximum allowable financing
Soft Market Category 1-3 loans
Maximum financing will be reduced by 5% (unless the loan is already 5% below the maximum allowable financing) if the appraisal or appraisal review indicates any of the following:
Declining Market
Oversupply
Marketing time over 6 months
Products / Programs Not Impacted
FHA / VA
Rural Housing
Bond programs using government or Rural Housing loan programs
Reverse Mortgages Pipeline ProtectionThe new Soft Market Policy is effective on all loans locked after Friday, January 18, 2008. Loans locked prior to the end of day on Friday, January 18, 2008 are not subject to the new policy. Those loans must meet all pre-existing Soft Market Policy requirements and must fund by March 18, 2008. Lock extensions may be granted as long as the loan funds by March 18, 2008 and meets all other pipeline protection rules.

California December 2007 Home Sales

A total of 25,585 new and resale houses and condos were sold statewide last month. That's virtually unchanged from 25,578 for November, and down 41.1 percent from 43,431 for November 2006. Last month's sales made for the slowest December in DataQuick's records, which go back to 1988. On a year-over-year basis, sales have declined the last 27 months.
The median price paid for a home last month was $402,000, down 2.9 percent from $414,000 for the month before, and down 14.8 percent from $472,000 for December a year ago. The median peaked last March/April/May at $484,000.
Much of the drop in median is due slower sales of expensive properties, the result of turmoil in the credit industry. In December 2007 a total of 17,500 California homes were purchased with a "conforming" loan up to $417,000. That was down 29.8 percent from 24,913 for the same month a year earlier. Last month a total of 4,600 California homes were purchased with a "jumbo" loan of more than $417,000. That was down 69.8 percent from 15,227 for December 2006.
The typical mortgage payment that home buyers committed themselves to paying last month was $1,878. That was down from $1,951 in November, and down from $2,160 for December a year ago. Adjusted for inflation, mortgage payments are 11.4 percent below the spring 1989 peak of the prior real estate cycle. They are 23.5 percent below the current cycle's peak in June last year.
DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. The numbers cover all sales, new and resale, houses and condos.
Indicators of market distress continue to move in different directions. Foreclosure activity is at record levels, financing with adjustable-rate mortgages or with multiple mortgages has dropped sharply. Down payment sizes and flipping rates are stable, non-owner occupied buying activity is edging up, DataQuick reported.

Is that Right? Or is someones hand on an emotional trigger?

Buyer sues agent becasue they felt they over paid for their home. Readers of this blog know I am 100% pro consumer but this just doesn't seem right. Let's say they held the home for 10 to 15 years then what? Does the Realtor come back and ask for additional monies? Anyone ever buy a stock and have it go down just to see it blossom a few years down the road? Whatever happen to due diligence - your not buying a pair of shoes.

Business
Feeling Misled on Home Price, Buyers Sue Agent
By DAVID STREITFELD
Published: January 22, 2008
Many resentful buyers may seek redress from the agents who found them a home and arranged its purchase.

(Click on the link and read the whole story in the NY times)

http://www.nytimes.com/2008/01/22/business/22agent.html?ex=1358744400&en=7ec5d1d52523ef9d&ei=5124&partner=permalink&exprod=permalink

Owner carry

You have your home on the market so its a very good assumption that you want to simply sell it. Keep this in mind. We are in a very bad housing slump, and things will get a bit worse better it gets better. Unless you own your home with no mortage you shoulder a major burden each month. Besides the mortage you have property tax, insurance, upkeep, and all those other little things like the power bill etc. Many sections of the greater sacramento area are over stocked with inventory (Elk Grove arae for example) so your competition becomes banks, auctions, new home, etc. This also means the housing values near you drop - becasue people don't buy at auction, REO, short etc. unless its a deal. Don't get wrong - homes are still being sold; many are thinking outside the box. Owner carry is a good thing. Initailly it seems like a troublesome matter - but in reality you reap a far greater YIELD then you would on a straight cash deal. Typically a buyer want the owner to carry becasue the buyer may have a ding on their credit which prevents them from qualifying for a convnetional loan in an ever tightening mortgage market. This doesn't mean the buyer doesn't have the proper income or job stability to fullfil their debt obligation. Bad things do happen to good people. Plus when a seller carrys its not for ever - after 12 to 24 months (if you don't consider all options your home may sit on the market for this long) of payments their credit is back to levels that would enable them to go refiannce the into a conventional note. Many companies service owner carry transactions so the seller isn't collecting the monthly payment - but the company handling the matter takes care of all that. Sellers - please understand the market and you could find yourself very fortunate. Some people are in a bad situation and with an owner carry - you can hit a home run. Imagine carrying the note for 30 years (most don't) - your $200,000 home would reap you nearly 3x the sales price. Plus after some due dilgence you'll find a market place of people who actually buy these notes. Good luck to you. If you are selling you owe it to yourself to read up on owner carry.

Basic Benefits to owner carry

Highest Price (buyers make full price offers and not low ball offers you maybe getting)

Fast Closing (Nothing holds up a sale more than new lender financing)

Tax Savings

Helping Mortgage Borrowers

The Mortgage Bankers Association (MBA) released information Thursday on the role the mortgage industry is playing in the current drive to help homeowners who are delinquent on or struggling with their mortgages.
According to MBA's data, during the third quarter of 2007 the mortgage industry worked with borrowers to modify approximately 54,000 loans and established formal repayment plans with an additional 183,000 borrowers. However, foreclosure actions were started on an estimated 384,000 loans.
The report stated, however, that 63 percent of the foreclosure actions were in cases where the borrower did not live in the home, did not respond to repeated attempts by the lender to reach them, or were defaulting on a previously existing loan modification or repayment plan.

Subprime loans played a major role in the loan resolution efforts. Approximately 13,000 of the loan modifications were done on behalf of subprime adjustable rate mortgage loans as were 90,000 of the repayment plans. Fixed-rate subprime loans accounted for 15,000 of the modifications and 30,000 repayment plans.
Subprime ARMs also accounted for about 166,000 of the foreclosure actions but 18 percent of these were on investor-owned homes. In 21 percent of the actions the borrower failed to respond to contacts by the lender. 40 percent of the subprime borrowers who became subject to foreclosure already had a repayment plan or loan modification in place but were not performing as agreed.
Across the board investor-owned homes represented a significant part of the problem, at least in the third quarter. They accounted for 28 percent of subprime fixed-rate foreclosure actions, 18 percent of prime ARM foreclosure starts and 14 percent of new prime fixed-rate foreclosure actions.
Anyone who works in any type of financial recovery operation will tell you that borrowers tend to panic when they get in trouble with payments. And panic frequently leads to avoidance. Troubled debtors don't answer the phone or screen calls, refuse to return calls from creditors, even hang up when contact is made. That is borne out by the MBA figures. Cases where the borrower could not be located or would not respond to attempts by the mortgage servicer to contact them accounted for 21 percent of subprime ARM foreclosure starts, 21 percent of subprime fixed-rate foreclosure starts, 17 percent of prime ARM foreclosure starts and 33 percent of the prime fixed-rate foreclosures started.
Jay Brinkmann, MBA's Vice President of Research said, "The mortgage industry took major steps during the third quarter to help those borrowers who could be helped. The numbers of loan modifications, negotiated repayment plans established, and other actions to help borrowers are large and compare favorably with the number of foreclosure actions started, particularly when those foreclosures are adjusted to remove the borrowers who clearly could not be helped.
"It is likely that the number of loan modifications for subprime ARMs will continue to grow through the outreach efforts of the industry," Brinkmann continued "Particularly through the HopeNOW Alliance that includes counselors, mortgage market participants and mortgage servicers working together to try and help avoid foreclosures whenever possible. The U.S. Treasury Department has played a crucial role in bringing the lending community together to develop approaches to deal with the current problems."
The MBA report is based on responses from mortgage servicers covering about 33 million mortgage loans, or approximately 62 percent of the loans outstanding. The numbers are grossed up to reflect the partial coverage of the market.

Federal Reserve Chairman Ben S. Bernanke told Congress today

``Fiscal action could be helpful in principle, as fiscal and monetary stimulus together may provide broader support for the economy than monetary policy actions alone,'' Bernanke said in testimony to the House Budget Committee. He repeated remarks from last week that the Fed is ready to take ``substantive additional action'' to insure against risks of a recession. Bernanke's acknowledgment that the economy is weak enough to need a fiscal stimulus may reinforce forecasts for the Fed to lower interest rates at least half a point this month. In a question and answer period initiated by Budget Committee Chairman Rep. John Spratt, a South Carolina Democrat, Bernanke said the Fed is ``not forecasting a recession'' for this year. Retail sales fell last month, unemployment rose, and housing markets are mired in the worst slump in 16 years.

``Banks have also evidently become more restrictive in their lending to firms and households,'' he said. ``More expensive and less-available credit seems likely to impose a measure of restraint on economic growth,'' said Bernanke

Homebuilders broke ground on the fewest homes since 1991 last month, the Commerce Department reported today. Building permits, a sign of future construction, declined by the most in 12 years, suggesting the housing slump will deepen.

Residential construction subtracted about 1 percent from growth in the third quarter, and ``likely curtailed growth even more in the fourth quarter,'' Bernanke said. Sluggish housing markets ``may continue to be a drag on growth for a good part of this year.''

New home sales will probably fall another 15 percent this year after tumbling an estimated 26 percent in 2007, according to a forecast from the Mortgage Bankers Association, the industry's largest trade group. Sales of existing homes will fall 13 percent this year, the group said.
``Conditions continue to be challenging in our markets and are expected to remain so throughout 2008,'' Robert Schottenstein, chief executive officer of M/I Homes Inc., a homebuilder in the Midwest, Florida and Mid-Atlantic states, said in a statement on Jan. 10. The Columbus, Ohio-based company said that sales fell in the fourth quarter.

FREDDIE MAC RELEASES RESULTS OF ITS 24TH ANNUAL ARM SURVEY

Small Initial Rate Discounts, Tighter Underwriting Reduce ARM Appeal

McLean, VA – Freddie Mac today released the results of its 24th Annual Adjustable-Rate Mortgage (ARM) Survey of prime loans, which found:

1)A decline in ARM share of overall lending, as the interest-rate savings relative to fixed-rate loans has shrunk.

2)Smaller lender discounts for introductory ARM rates.

3)3/1 and 5/1 hybrid ARMs are the mostly widely offered products among lenders.

"Disruptions in the capital markets beginning in August and an increase in delinquencies on ARM product has led to a sharp decline in interest-rate discounting and a tightening of credit underwriting on ARMs in recent months," said Frank Nothaft, Freddie Mac vice president and chief economist. "A year ago, the initial-rate discount on the popular 3/1 and 5/1 hybrid products was about 1.8 percentage points. In our latest survey, the rate discount had virtually disappeared on these products."
"Delinquency rates on prime ARMs have moved sharply higher over the past year, and are well above rates on prime fixed-rate loans, according to the Mortgage Bankers Association. They have reported that the serious delinquency rate on prime ARMs was 3.1 percent, compared with 0.8 percent for prime fixed-rate loans as of September 30, and with 1.1 percent on prime ARMs one year earlier," observed Nothaft. "The Federal Reserve found in October's Senior Loan Officer survey that 41 percent of commercial banks had tightened underwriting standards for prime mortgages during the third quarter, and 60 percent of banks offering non-traditional loans had as well. Tighter underwriting and reduced initial-rate discounts have diminished the appeal of ARMs with consumers."
The survey, based on data collected December 17 to December 21, found that starting rates for ARMs were close to or above rates a year earlier, even though the Federal Reserve had lowered its federal funds target from 5.25 percent to 4.25 percent over the time since Freddie Mac's previous survey. In contrast, fully-indexed rates had fallen to their lowest levels in three years, resulting in an erosion in the initial-rate discount that had been prevalent in the market during 2005 and 2006. The fully-indexed rate is the rate on the index plus the ARM margin; the margin averaged about 2.75 percent across ARM products in the survey, very similar to last year's.
ARMs accounted for 17 percent of loan applications in October 2007, according to Freddie Mac's Primary Mortgage Market Survey®, the lowest since June 2003 when fixed-rate loans were near a 45-year low in interest rates and refinance activity was near a peak. Since 1995, the first year that Freddie Mac collected ARM share data, the ARM share has fluctuated between an annual low of 11 percent in 1998 and a high of 33 percent in 2004. "Consumers respond to changes in the relative cost of different loan products. As ARMs became more expensive relative to fixed-rate loans during the closing months of 2007, the ARM share of lending declined," explained Nothaft.
The initial rate on jumbo 1-year ARMs was about one-quarter of a percentage point higher than on conforming 1-year adjustables, the largest gap in seven years, according to Freddie Mac's surveys. Jumbo loans have a loan amount that exceeds the maximum loan limit for Freddie Mac, currently $417,000 for a one-family home in the 48 contiguous states, and are not eligible for sale to Freddie Mac. The increasing relative cost for jumbo ARMs largely reflects the higher funding costs for all jumbo loans in the wake of the capital market disruptions since August.
Over the last several years, annually adjusting ARMs with an initial fixed-rate period of more than one year, known as hybrid ARMs, have grown in popularity. Within the hybrid category, ARMs with an initial fixed-rate period of five years, known as 5/1 ARMs, have been the dominant choice of consumers. The average initial interest rate on 5/1 hybrid ARMs was 6.00 percent in the 24th Annual ARM Survey, or about 0.5 percentage points above the rate on the traditional 1-year adjustable, and 0.1 percentage points below the rate on a 30-year fixed-rate mortgage. "A 5/1 hybrid ARM provides the consumer the comfort of knowing that the interest rate will be fixed over the first five years of the loan. However, the interest rate may jump as much as five percentage points on the fifth anniversary. Thus, the product has been popular with families who plan to have the mortgage for five years or less," Nothaft observed. The 5/1 hybrid was also the most widely available ARM product, offered at more than 90 percent of lenders canvassed.

(NAR) announced on Monday that it is launching a new campaign

The National Association of Realtors® (NAR) announced on Monday that it is launching a new campaign, reaching out to consumers "with the facts about homeownership and the value of real estate as a long-term investment."
NAR's Public Awareness Campaign is centered around a new website, www.HousingMarketFacts.com which provides information on homeownership as an investment, including a calculator that purports to show have a down payment will grow over the years, and links to portions of the official Realtor.org site that will guide viewers in accessing housing and community research or to identify an appropriate real estate agent.
The campaign will also use broadcast and print media to make its point to consumers. Local associations can receive posters, newspaper/magazine ads, and billboards following the campaign's two basic themes: "Building Wealth," and "Home Values." Between now and November the Association will broadcast ads on these same themes more than 10,000 time on national TV and radio. Local associations can coordinate the national media buys with their own local advertising. The media plan for the PR campaign indicates that network television ads will be sparse - a total of 265 in the 11 months of the effort - but cable television on channels such as the Food Network, HGTV, the History Channel, DIY, and TBS will broadcast 2,340 ads and Hispanic outlets will get 558.
It is interesting to note that only Fox, CBS, and ABC are designated networks. One has to wonder if the NAR has yet to forgive NBC for the priceless moment on The Today Show three or four years ago when a horrified Al Roker gave consumer reporter Janet Lieberman about four chances to recant her breezy assertion that a real estate agent and a Realtor were synonymous. I believe she said something to the effect that "you say tomato." Come on guys, NBC did apologize....and apologize...and...
According to NAR's press release about the new campaign, the median price of existing homes has increased an average of more than 6 percent every year for the last 30 years and home values have historically close to doubled every ten years. NAR quotes a Federal Reserve study that shows that the average homeowner's net worth is 46 times that of the average renter (although there may be a certain cause and effect flaw in that argument.) NAR expresses concern that the frenzy of media reports about the state of the housing market may be keeping some potential home buyers on the sidelines out of fear and it hopes its ads will counteract that phenomenon.
NAR President Dick Gaylord said "Nobody buys a home in the national real estate market. All real estate markets are local, and buyers and sellers who are thinking about making a move should consult with a Realtor® in their local market to learn about conditions specific to the area. It's also advisable to look beyond the immediate horizon - real estate has proven itself to be a good long-term investment and a safe, secure way to build long-term wealth."
According to NAR's most recent forecast, existing-home sales might total 5.66 million in 2007, the fifth highest on record, rising to 5.70 million in 2008 and 5.91 million in 2009. Existing-home prices will probably o be down 1.9 percent to a median of $217,600 for all of 2007 which is good news for buyers; hold steady in 2008, and then rise 3.1 percent in 2009 to $224,400.

Open House: Auctions become popular spot for home buyers

Auctions are becoming an increasingly popular method of purchasing homes in today's sluggish marketplace. This immediate-sale technique is very appealing at a time when selling homes the conventional way is slow and the number of inventoried homes is at a record high level. The auctioning of real properties is the fastest growing auction specialty, according to the National Auctioneers Association. Over the past five years, residential real estate sold at auctions grew by 39 percent, while commercial and industrial real estate auctions rose 27 percent. It wasn't long ago that residential real estate auctions were only used to sell foreclosed homes, fixer-uppers and other hard-to-sell properties. Today, all types of properties are sold at auctions, from small fixer-uppers to large luxury homes. Many newly constructed homes are now being auctioned, including single-family residences, condos and townhomes.
"There are many benefits to buying a home at auction," said Realtor Val Gehringer. "Homeowners are committed to selling so there aren't long negotiation periods, and buyers can often close on their new home in fewer than 30 days. Auctions also attract qualified buyers since most auction houses require that potential buyers have financing in place and present written loan approval before the day of the auction. And they usually require nonrefundable deposits, typically 10 percent of the home's value." There are three primary types of real property auctions. The absolute auction is where the property is sold to the highest bidder regardless of the price. The minimum bid auction is where bids are accepted at or above an advertised minimum price. The reserve auction is where the seller has the right to accept or reject any offer that falls below a confidential reserve price. Prospective buyers usually have ample opportunity to inspect the property by appointment or at an open house prior to the auction. Typically, the auctioning of a home takes less than 10 minutes. How's that for speedy marketing? Most serious bidders hold off for a few minutes before bidding, waiting to see what others bid.
If you or your broker are interested in auctioning your home, take time to attend several auctions first to learn about the process and what it takes to produce a successful auction.
Q: When are home prices expected to stabilize?
A: Mortgage interest rates are rising and sales of existing homes are now showing signs of stabilizing, setting the scene for more "fence-sitting" consumers to take action with their plans to purchase and finance a home, or refinance an existing mortgage before the rates rise to higher levels.
"Stronger consumer spending and an increase in the core price deflater is causing long-term bond yields to inch up, with mortgage rates following," said Frank Northaft, chief economist for Freddie Mac, a major government-sponsored buyer of mortgages. "However, recent data releases suggest there might be further weakness in the housing market and that could allow interest rates to drift back down from time to time."
Existing home sales rose in November, indicating a stabilization in housing in the wake of mortgage disruptions in 2007, according to a report from the National Association of Realtors. Total existing-home sales - including single-family homes, townhomes and condos - rose 0.4 percent to a seasonally adjusted annual rate of 5 million units in November.
"Existing home sales should continue to hover in a narrow range, and that's good news because it will be a further sign that the housing market is stabilizing," said Lawrence Yun, chief economist for the National Association of Realtors.
Q: What is the increasing number of home raffling programs all about?
A: In addition to the increasing number of home auctions, raffling of residential properties is also on the increase. Most home raffling programs are produced as a fundraising project for a nonprofit organization.
An example of a current project is the raffling of a luxury home in the popular Channel Islands Harbor area in seaside Oxnard, Calif. The project was launched by the Boys and Girls Clubs of Greater Oxnard and Port Hueneme.
Raffle tickets are being sold at $150 each. The home, or $1 million in cash, will go to the owner of the winning raffle ticket - scheduled to be drawn on March 31. A total of 18,000 tickets are expected to be sold.
"When people buy these tickets, they are helping a great organization and our greatest asset, children," said Tim Blaylock, chief professional officer of the Boys and Girls Club.
This is the second year the club has sponsored such a home raffling project. Proceeds support the club's goal of expanding services to more children, age 6 to 18. This year's project is named the "House of Ten Thousand Dreams Home Raffle." For more information, phone 866-720-2582.
Q: What's the deal with the new Mortgage Licensing System?
A. A new Nationwide Mortgage Licensing System (NMLS) was launched on Jan. 2. It's an Internet-based system that serves as the foundation of a coordinated mortgage regulatory framework. The new system was implemented by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators.
The system is one part of a multifaceted plan to improve regulation and bring about greater uniformity across state lines in mortgage supervision. These efforts include coordinated supervision, improved regulatory practices and consistent standards for testing and training for mortgage originators. Many states have recently changed or are in the process of reworking their laws and regulations.

BofA's awesome Countrywide tax break

Brace yourselves, taxpayers of America. You're going to help Bank of America finance its $4 billion buyout of Countrywide.

Guess who's helping Bank of America pay for its $4.1 billion purchase of Countrywide Financial? Answer: The taxpayers of the United States.
That's because Bank of America (BAC, Fortune 500), which is solidly profitable, will be able to use some of Countrywide's losses to offset its own taxable income. The tax break could total about half a billion dollars over the first five years, according to an estimate by tax guru Robert Willens, who left Lehman Brothers Friday after a 20-year run and will be in business as Robert Willens LLC starting next week. The losses could be worth considerably more to Bank of America starting in the sixth year, depending on how big Countrywide's losses are when Bank of America formally acquires it.

Countrywide's sins: How you'll pay (read the whole story here)

T.G.I.F - Here is some fun to start your weekend

Michael - Your Not Calling the Right People


According to [private], there are in fact efforts underway to refinance the $23,000,000 loan that was secured against the 2,700 acre ([private] says 2,900 acre) property. However, no lender seems to want that hot potato and no person or entity has yet stepped up to give the wacky singer turned tabloid freak show a financial assist.

Michael Jackson and his three kiddies are currently living in the Palms Hotel as non-paying guests of the Maloof brothers - owners of the Palms Hotel, Kings Basketball..etc..

Creates Largest U.S. Mortgage Lender and Servicer

01/11/2008
Bank of America Agrees to Purchase Countrywide Financial Corp.
The purchase will make Bank of America the nation's largest mortgage lender and loan servicer. This is an important advancement in the company's desire to help customers and clients meet all of their financial needs. A mortgage is one of the key foundations of many customer relationships.
Countrywide will benefit from the stability of being part of the largest and one of the most financially strong financial institutions in the United States.
Bank of America will benefit from Countrywide's broader mortgage capabilities, including its extensive retail, wholesale and correspondent distribution networks. The Calabasas, California-based company operates more than 1,000 field offices and has a sales force of nearly 15,000. Countrywide also has a leading mortgage technology platform, a well known brand in home lending and management expertise in a number of key areas.
Bank of America would gain greater scale in originating and servicing mortgages in the U.S. Countrywide had $408 billion in mortgage originations in 2007 and has a servicing portfolio of about $1.5 trillion with 9 million loans. The purchase also includes Countrywide's Lender Placed insurance and other businesses.
"Countrywide presents a rare opportunity for Bank of America to add what we believe is the best domestic mortgage platform at an attractive price and to affirm our position as the nation's premier lender to consumers," Bank of America Chairman and Chief Executive Officer Kenneth D. Lewis said. "Countrywide customers will gain access to a broad set of consumer products including credit cards and deposit services. Home ownership is a fundamental pillar of the U.S. economy and over time it will be a key area of growth for Bank of America."
"We are aware of the issues within the housing and mortgage industries," Lewis continued. "The transaction reflects those challenges. Mortgages will continue to be an important relationship product, and we now will have an opportunity to better serve our customers and to enhance future profitability."
Countrywide's deep retail distribution will enhance Bank of America's network of more than 6,100 banking centers throughout the U.S. After closing, Bank of America plans to operate Countrywide separately under the Countrywide brand with integration occurring no sooner than 2009.
"We believe this is the right decision for our shareholders, customers and employees," said Countrywide Chairman and Chief Executive Officer Angelo R. Mozilo. "Bank of America is one of the largest financial institutions in the U.S. and internationally, and we are confident that the combination of Countrywide and Bank of America will create one of the most powerful mortgage franchises in the world. We have had a long and positive relationship with Bank of America and our servicing and origination businesses, as well as other aspects of our operations, will be substantially enhanced as a result of this transaction."
Financial Terms
Under the terms of the agreement, shareholders of Countrywide would receive .1822 of a share of Bank of America stock in exchange for each share of Countrywide.
The purchase is expected to close in the third quarter and to be neutral to Bank of America earnings per share in 2008 and accretive in 2009, excluding merger and restructuring costs.
Bank of America expects $670 million in after-tax cost savings in the transaction, or 11 percent of the expense base of the two companies' mortgage operations. About one third of those savings would come in 2009, two thirds would be realized in 2010 and savings would be fully realized in 2011.
The agreement has been approved by Bank of America's board of directors and Countrywide's board of directors and is subject to approval by Countrywide's shareholders and customary regulatory approvals.
Subprime Initiatives
Origination of subprime loans is not planned for the combined company. Both companies share the goal of keeping distressed mortgage borrowers in their homes when possible. Both Bank of America and Countrywide continue to work with public officials and community groups to explore new initiatives to help homebuyers and communities affected by the subprime issue.

Additional Information About this Transaction
In connection with the proposed merger, Bank of America will file with the SEC a Registration Statement on Form S-4 that will include a proxy statement of Countrywide that also constitutes a prospectus of Bank of America. Countrywide will mail the proxy statement/prospectus to its stockholders. Bank of America and Countrywide urge investors and security holders to read the proxy statement/prospectus regarding the proposed merger when it becomes available because it will contain important information. You may obtain copies of all documents filed with the SEC regarding this transaction, free of charge, at the SEC's website (http://www.sec.gov/). You may also obtain these documents, free of charge, from Bank of America's website (http://www.bankofamerica.com/) under the tab "About Bank of America" and then under the heading "Investor Relations" and then under the item "SEC Filings". You may also obtain these documents, free of charge, from Countrywide's website (http://www.countrywide.com/) under the tab "investor relations" and then under the heading "SEC & other filings."
Proxy Solicitation
Bank of America, Countrywide and their respective directors, executive officers and certain other members of management and employees may be soliciting proxies from Countrywide stockholders in favor of the merger. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of the Countrywide stockholders in connection with the proposed merger will be set forth in the proxy statement/prospectus when it is filed with the SEC. You can find information about Bank of America's executive officers and directors in its definitive proxy statement filed with the SEC on March 19, 2007. You can find information about Countrywide's executive officers and directors in definitive proxy statement filed with the SEC on April 27, 2007. You can obtain free copies of these documents from Bank of America and Countrywide using the contact information above.

We have lift off....

WASHINGTON, D.C. (January 10, 2008) — The Mortgage Bankers Association (MBA) wednesday released its Weekly Mortgage Applications Survey for the New Year’s holiday shortened week ending January 4, 2008. The Market Composite Index, a measure of mortgage loan application volume, was 706.0, an increase of 32.2 percent on a seasonally adjusted basis from 533.9 one week earlier, which was the week between the Christmas and New Year holidays. On an unadjusted basis, the Index increased 81.1 percent compared with the previous week and was up 8.7 percent compared with the same week one year earlier.
The Refinance Index increased 53.9 percent to 2494.2 from 1620.9 the previous week and the seasonally adjusted Purchase Index increased 14.7 percent to 414.0 from 360.8 one week earlier. On an unadjusted basis, the Purchase Index increased 56.2 percent to 251.8 from 161.2 the previous week. The seasonally adjusted Conventional Index increased 34.1 percent to 1015.3 from 757.4 the previous week, and the seasonally adjusted Government Index increased 18.2 percent to 190.4 from 161.1 the previous week. The four week moving average for the seasonally adjusted Market Index is down 4.1 percent to 624.4 from 650.8. The four week moving average is down 3.5 percent to 397.9 from 412.4 for the Purchase Index, while this average is down 4.5 percent to 2031.0 from 2127.4 for the Refinance Index.
The refinance share of mortgage activity increased to 57.7 percent of total applications from 50.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 9.3 from 9.8 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.73 percent from 6.05 percent, with points increasing to 1.10 from 1.05 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.21 percent from 5.61 percent, with points increasing to 1.18 from 1.02 (including the origination fee) for 80 percent LTV loans. The average contract interest rate for one-year ARMs increased to 6.04 percent from 6.00 percent, with points decreasing to 0.99 from 1.00 (including the origination fee) for 80 percent LTV loans.
**SPECIAL NOTES**
The survey covers approximately 50 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.

Contemplating negative action relative to the company...

Dear Business Partner: Yesterday, rumors circulated about Countrywide's financial condition that caused concern among our Business Partners and employees. While our policy is that we typically do not comment on rumors, yesterday's unique circumstances led to Countrywide issuing the below statement that I wanted to share with you right away:
"There is no substance to the rumor that Countrywide is planning to file for bankruptcy, and we are not aware of any basis for the rumor that any of the major rating agencies are contemplating negative action relative to the Company."In addition, the Company will host a live management discussion of the results for the 2007 fourth quarter and full year on Tuesday, January 29, at 12:00 p.m. (EST). On behalf of the entire Countrywide®, America's Wholesale Lender® team, I want to extend our appreciation for your ongoing support during these challenging market conditions. As always, thank you for your business. Todd A. Dal Porto Senior Managing Director and President Countrywide, America's Wholesale Lender

We told you to look out for these guys.....

I've posted about the great CUSTOMER SERVICE Wells Fargo promotes and here is some more of that great service. In my humble opinion it really isn't the rank and file @ wells but deeper then that. That's just my opinon from my personnel experience. NO wonder they never ask [me] why 'I'm' closing accounts out - they already have a good idea; becasue thats what the game plan called for?

"We don't care he has an 800 FICO deny it"

"We don't care his family has been doing business with Wells for almost 30 years"

"We don't error in customers favor"

"Our ATM machines don't error - we don't care you've been a great customer for neraly 30 years we don't the believe the ATM machine errored and thus shorted you a $100 bucks - we the bank will part ways with you and the 30 years of banking with us before we even lean in the direction of making up for your meager $100 loss. Your banking with us here at wells for nearly 3 decades is not worth the appropriate customer service measures it would take to refund THE ERROR and keep you. "



Sheila Dixon
Mayor,
Baltimore
250 City Hall ..Baltimore Maryland 21202
410-396-3835 .. Fax: 410-576-9425

FOR IMMEDIATE RELEASE
January 8, 2008
CONTACT:
Sterling Clifford
(443) 452-9063


Baltimore Files First Lawsuit in Nation Seeking to Recover Costs for Injury to City Caused by Racially Discriminatory Lending Practices Resulting in Epidemic of Foreclosures in the City’s Minority Neighborhoods

Baltimore, MD (January 8, 2008) – Today, the City of Baltimore filed the first lawsuit brought by a major American city against a national lender to recover millions of dollars in costs resulting from irresponsible subprime lending practices targeted at its minority and African American neighborhoods.

The suit, filed in U.S. District Court for the District of Maryland, alleges that Wells Fargo Bank has, since at least 2000, intentionally targeted Baltimore’s minority communities for bad loans with discriminatory and unfair terms. These illegal lending practices have resulted in extraordinarily high rates of foreclosure in some of Baltimore’s most vulnerable communities – foreclosures that ultimately cost the City millions of dollars in lost tax revenues, added police and fire costs; court administrative costs; and social programs needed to maintain stable and healthy neighborhoods.

The lawsuit alleges that Wells Fargo is liable to the City for millions of dollars in damages under the Federal Fair Housing Act, which makes it illegal to target minority communities for unfair and discriminatory practices.

“Foreclosures caused by reverse redlining create a very real and very dramatic ripple effect in our neighborhoods,” said Mayor Dixon. “By driving down the value of nearby homes, foreclosures also drive down City revenues and place additional financial burdens on the City and its residents. It is our responsibility to do what we can to stop it.”

In Baltimore, the foreclosure crisis has hit African American neighborhoods and homeowners the hardest. Wells Fargo has one of the highest rates of foreclosure of any lender in Baltimore, and its foreclosure rate in majority African American neighborhoods is four times the rate in majority white neighborhoods, and twice the City average.

The lawsuit alleges that Wells Fargo is one of the leading causes of the disproportionately high rate of foreclosures in these neighborhoods. Specifically, the suit alleges that Wells Fargo has caused these foreclosures by targeting Baltimore’s African American
neighborhoods for irresponsible and abusive subprime lending practices designed to maximize short term profits for the Bank.

The complaint alleges that Wells Fargo’s illegal practices include:

• Discriminatory terms
• Unfair, high cost pricing
• Unsuitable products
• Deceptive and improper underwriting practices


These practices have resulted in an epidemic of foreclosures in Baltimore’s most vulnerable minority neighborhoods, which in turn have cost the City millions of dollars in damages. The costs to the City include:

• A decline in the value of nearby homes, resulting a decrease in property tax revenue
• An increase in the number of abandoned and vacant homes
• Increased expenditures for police and fire protection
• Expenditures for administrative, legal, and social services


The lawsuit seeks compensatory damages cover the costs the City has incurred and will continue to incur as a result of Wells Fargo’s illegal practices. The complaint also seeks punitive damages in an amount large enough to deter Wells Fargo, one of the largest mortgage lenders in the country.

The City of Baltimore is represented by its Law Department and by Relman & Dane, a civil rights law firm based in Washington, D.C.

# # #

For additional information about the lawsuit, visit our website at http://www.baltimorecity.gov/ or the Relman & Dane website at http://www.relmanlaw.com/

To obtain a copy of the complaint, contact John Relman at jrelman@relmanlaw.com (202) 728-1888 or go to http://www.relmanlaw.com/.

2006 Compared to 2007 Gross Number Count

Single Family 1 Lot 1 home 2006-2007 Comparison - a rough look.
Just about every place you turn you would think the housing market is currently closed for business - but the wise buyer is taking advantage of some of the lowest rates EVER and lowest prices in years. I didn't factor in Townhomes, condos, mobiles. Strickly 1 home 1 lot - I just wanted to get an over view.

Galt 254 in 2007 320 in 2006
Stockton 1663 in 2007 2828 in 2006
Lodi 415 in 2007 533 in 2006
Sacramento 3231 in 2007 7220 in 2006
Rocklin 601 in 2007 699 in 2006
Granite Bay 249 in 2007 268 in 2006
Loomis 123 in 2007 126 in 2006
Cool Pilot Hill 53 in 2007 89 in 2006
El Dorado Hills 551 in 2007 591 in 2006
Mather 39 in 2007 69 in 2006
Roseville 1226 in 2007 1352 in 2006
Citrus Heights 602 in 2007 687 in 2006
Elk Grove 1490 in 2007 2010 in 2006
Folsom 758 in 2007 811 in 2006
North Highlands 206 in 2007 320 in 2006
Rancho Cordova 84 in 2007 55 in 2006

It always comes back to location, price and condition.
So when your looking at the numbers think like this -
For every home that was sold, a home was bought - many more residential real estate transactions then many news outlets would lead you to believe. Not a great market, but if you look at the numbers from 2006 to 2007 people are buying and selling - the real estate profession is still open for business.

Here is some more 2006/2007 comparisons

West Sacramento 328 sold in 2007 & 428 sold in 2006

Davis 405 sold in 2007 & 441 sold in 2006

Orangevale 240 sold in 2007 & 341 sold in 2006

Woodland 285 sold in 2007 & 408 sold in 2006